Will Trump Fan the Flames as Huawei Is Burned at the Stake?

Ray Le Maistre
2/8/2019
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It was always possible that, in an act of political showboating, the Trump administration might officially ban the deployment of Chinese communications networking technology from US networks for security reasons. And now, it seems, that might happen in the days leading up the MWC2019, according to Politico, which cites three sources in its story, "Trump likely to sign executive order banning Chinese telecom equipment next week."

Such a move had already been highlighted late last year by Reuters. (See Trump to Ban Huawei, ZTE in US in January?)

Our analysis of that development lays out the fractious track record that both Huawei and ZTE have had with the US authorities, so there is no need to repeat it here. In a nutshell, the two Chinese firms are pariahs.

Issuing an executive order as outlined by Politico and Reuters would certainly appease those who want to see Chinese technology (or any?) firms vilified and labelled as a threat. Mud sticks, especially if it's thrown many times. Such an order would be enough to convince the weak-minded that, without doubt (or evidence), Huawei and ZTE are indeed a security threat to the US, an accusation that is bandied about so freely.

But, in my view, such an order would benefit only those who profit from a spike in social media traffic.

It would either have no impact or, indeed, be harmful to everyone else -- including the US.

Here's why.

First, banning Huawei and ZTE -- which is, essentially, what such an order would do -- would make no difference to the major network operators such as AT&T, Verizon, T-Mobile and Sprint, as well as the major cable operators. Because none of them are currently deploying that Chinese technology anyway: If they did, it would hit them financially, as they'd pretty much be giving up any possibility of winning lucrative federal communications services contracts and likely also lose some enterprise and even consumer business.

Essentially, Huawei and ZTE are already excluded from that market -- it's just that, currently, it's not official -- there is no Presidential thumbprint.

It would, though, cause a headache for, and impact the business of, the small number of local, small network operators that have selected Huawei network gear because it's been affordable and suits their purposes.

So the impact of such an order would be negative to some US companies but have no other discernible impact: It would not make the US more secure.

What that order would do, though, is pour fuel on the flames already licking at the foot of the political pyre upon which the names of Huawei and ZTE have been tossed. It would hammer home the message that Chinese tech firms are enemies of the US, companies that want to help China spy on American businesses and hard-working people. It would worsen relations between the US and China and put pressure on US allies to pick sides.

But what are the likely outcomes here? What would happen next?

Here are a few strong possibilities.

In the very near term, it would politicize this year's MWC. That event does not need to be made any harder for the companies and people that spend a lot of money heading to Barcelona to try to do business. It would drive everyone to Rioja and albondigas even earlier than ever: Important conversations would be interrupted, or never begin, because 'the Huawei situation' would need to be discussed. It is already, reportedly, on the (behind the scenes) agenda. (See GSMA set for a crisis meeting at MWC over Huawei bans -- report.)

I would imagine that, even more quickly, it would lead to a greater volume of cyber attacks on the US from the Far East. I am guessing here, but it's not hard to imagine that some digital retribution would be sought, either by independent agents looking for an excuse to attack US institutions or by more organized groups. A Trump order would invite efforts to try and breach US cyber defenses -- that is frighteningly obvious, right? And it could result in serious disruption, cost and interference. Which is sad.

It would also increase the chances of retaliation from the Chinese government, and that would directly impact US companies in a negative way. It can only make things worse. Again, that's sad.

And it would likely lead to greater R&D and facilities investment in China and elsewhere in Asia to strengthen local markets and boost the capabilities of Chinese technology companies in an effort to make them even more competitive in non-US markets.

This is all bad news for the US.

What is the upside for the US and US companies from such an executive order? Please feel free to suggest some on the message boards below because I can't identify any.

I hope this executive order never becomes a reality. There is nothing to gain from it for anyone other than table-thumping politicians.

And before the abuse begins, I will repeat here what I have written before: The Chinese companies are not angels. They are not blameless. They carry out the same sort of industrial espionage as (actually, possibly worse than) other companies. Some of them break international trade agreements and try to cover their tracks as they seek to do 'bad' business. And they're not good at getting away with it.

But companies that are guilty of one thing are not necessarily guilty of others. It's non-sensical. Just because Company A breaks international trade embargos and tries to illicitly get the lowdown on its competitors' developments doesn't mean it's going to open up its software to government spies.

Of course, the Chinese government is not helping the cause of either Huawei or ZTE by effectively ordering its citizens to undertake any task required by the state -- that only leads to more fervent accusations of malfeasance.

And, here's a thought. If the Chinese government wanted to tap into US communications networks, would using a Chinese technology company already suspected of being a security threat as a conduit make sense? Or would it be better to infiltrate a trusted company and tap into the networks that way? These intelligence operations are sometimes clever and sneaky, you know.

I hope this rumored executive order doesn't exist or become official. The world is a better and more peaceful place without it. Huawei and ZTE are already feeling the heat around the world -- President Trump doesn't need to fan the flames. If he does, though, it's possible the US might suffer a backdraft.

— Ray Le Maistre, Editor-in-Chief, Light Reading

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brooks7
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brooks7,
User Rank: Light Sabre
2/11/2019 | 11:21:30 PM
Re: But....
So, I think there are several questions that we can talk about to help us understand the issue.

 

1 - Is the PRC working on expanding its economic and political influence on a Global Basis?  I would say the answer to this is an unequivical yes.  The most obvious example of this is the Belt and Road initiative.  We can argue about whether this is a good or bad thing.  What I think is true is that this growth is directly opposed to influence by the US.  This answer says to me that the countries are on opposite sides (unlike say the US with Brazil or India).

2 - Are telecom equipment and services critical national security assets?  I can not imagine that anybody on this site could believe otherwise.  I would be happy to entertain any notion that such equipment is NOT critical.  I know of no such arguments.

3 - Are Huawei (and potentially ZTE) actively or passively acting in conjunction with the Chinese Communist Party?  I would say that this is likely to be at least partially yes (see the ZTE/Iran and potentially Huawei/Iran issues).  How directed and deep this assocation?  I can not say, nor do I think anyone else here can.  But from a policy standpoint, why take the chance?  We have (maybe) seen the hardware hacking scandal on servers.  

I have stated in the past that I expect spies to spy.  That is true whether they are Chinese or American.  If I were China, I would be highly nervous about US comm equipment in their network.  Just as I am nervous about Chinese equipment in the US network.

For me the question that I think US policy might be based on:  If the PRC decided to move militarily on Taiwan (and anybody that completely discounts this possibility should read the PRC's own statements), would they like to use any equipment to monitor or interfere with US communications/response?  If we think that is possible or likely, then we need to study the issue with concern.

seven

 
truelle
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truelle,
User Rank: Light Beer
2/11/2019 | 5:00:19 PM
Huawei
Ray is pretty close to the truth. Forget the fact Huawei advertises with Light Reading.  I have worked with Huawei around the world since 2006 as a company that manages their CPE for Carriers, ISPs and Telco. We manage their CPE in the U.S. and around the world.  In our 13 years of working with Huawei, we have seen nothing in their firmware or equipment that would cause concern....thaat is no more than any other vendor like Cisco, Juniper, Ericsson or Nokia.

 

Remember Our U.S. Giveenrment is hacked all of the time (Clinton's email server!) and the Government runs on Cisco, Juniper, Ciena ,,,,,,,,all U.S. Companies.  

 

The U.S. Government caused this situation. Nortel was allowed to go bankrupt. Lucent merged with Alcatel, who filed reorganization to merge with financial crippled Nokia. Ericsson financial malfeasants so no R&D funding into 5G. Nokia no R&D into 5G.  Huawei filled the void of our bankrupt and under funded incumbents. Huawei invest $9 billion annualy into R&D of 5G increasing to $12 billion over the last couple of years. No wonder they are the leader in 5G and deserve to be.

IBM set-up Huawei's supply chain to the tune of $100 million. Accenture also worked with Huawei on their supply chain. SAP has co-located a research facility in China to work with Huawei on cloud services. Microsoft uses Huawei for their Azure product.  No reports of any espionage.

 

Last, if the U.S. were to  keep Huawei from the U.S., 5G will be slow to arrive here, network vendors will make equipment expensive and Huawei will thrive given the size of the Chinese market on it's own.  Inuendo, exaggerated accusations and Government officials who also stated MCI would cause a national intelligence concern if they were allowed to break up AT&T. Should we be concerned yes, but I am confident Huawei will negotiate with our Government and resolve the issues Ray presents in his article.  I for one think Ray has addressed the issue with more than a passion for Huawei's advertising revenue and I say that  knowing the facts not the fake news. 

 

 
Ray@LR
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[email protected],
User Rank: Blogger
2/11/2019 | 11:59:52 AM
Re: But....
'So you guys are saying that controversial policies that generate news is not good for a news site?'

Well, yes, there's no doubt that it adds to the long list of potential things going on right now... is this was the laundry and dry cleanig industry this would be absolutely incredible but this is just another day at the coalface in telecoms!! :-)
Phil Harvey
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Phil Harvey,
User Rank: Light Sabre
2/11/2019 | 10:38:31 AM
Re: But....
Serious answer: Yes, controversy does get people talking. And, also, people in this industry do tend to care what the world's largest telecom vendor is doing.

Less serious answer: We have a policy about conflicts of interest: If there's no conflict, we're not interested.
brooks7
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brooks7,
User Rank: Light Sabre
2/11/2019 | 10:07:38 AM
Re: But....
So you guys are saying that controversial policies that generate news is not good for a news site?

seven
Ray@LR
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[email protected],
User Rank: Blogger
2/11/2019 | 5:28:20 AM
Re: Undeclared interest
"For completeness, you should have stated the fact that Huawei is a major customer of this site, spending a lot of dosh on marketing. It is understandable that you would want to hang onto that source of income, but I would have preferred not to have to make that point myself."

I would ask you to read the article again.

This is not an article defending or supporting Huawei, which you seem to believe it is.

This is an article pointing out how, in  my opinion, such an executive order would have no real impact on Huawei -- it would make no difference to its business prospects in the US market -- but have negative implications for the US and US companies.

Maybe I should have declared, to be totally transparent, that Light Reading does lots of business with US companies... because, ultimately, I think such an order could only be negative for their interests.

 

While we are at it.... I am very glad to say that our editorial independence, whereby we treat every company as Company X in our reporting, is not only the 'right' thing to do but is also good for business. We will always be criticized, but that is healthy. The day that no one is complaining is when things have gone awry.  
Ray@LR
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[email protected],
User Rank: Blogger
2/11/2019 | 5:13:43 AM
Re: But....
'Would it be good for Lightreading?'

 

That is not a factor - not a consideration. My commentary here is that such an order would represent political posturing that has only downsides for the US.

Would such an executive order have any impact on Light Reading's business? I can't see how it would make any difference. 
Ray@LR
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[email protected],
User Rank: Blogger
2/11/2019 | 5:09:56 AM
Re: What backdraft?
Um... what?

Which US operator is going to buy Infinera gear that already isn't doing so? 

My point (once again) is that such an executive order would make no difference to the buying patters of the major US operators -- it would only have mutiple negative impacts in the short, medium and long term on US interests. 

As for 'get off the tit' -- I'm glad to say that we don't need to suck up to any company. Doing so would be bad for our business.

The reason I wrote this opinion piece is that I believe that enacting such an executive order would be bad for the US, which would not be a great move for the US president, especially one who wears a 'make America great again' badge. I am hoping that Trump will conider the implications, just as he did with the ZTE situation:

https://www.lightreading.com/components/optical-components/trump-tweets-on-zte-and-gives-the-chinese-vendor-a-lifeline!/d/d-id/743043

 

I know that people questioned his decision to rescind the supply ban on ZTE, saying that it was unpatriotic and throwing a bone to the Chinese, but, in my view, it was a move that was positive for the US because it saved thousands of US jobs. That move was good for the US, even if it didn't appear so at a quick glance -- the same applies here, IMHO. 
Ray@LR
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[email protected],
User Rank: Blogger
2/11/2019 | 4:47:11 AM
Re: Oxymoron?
maverickzz

I feel we are going to disagree here. In my opinion, if an influential company from Country A is 'attacked' by the federal authorities of Country B, then Country B is likely to experience a greater volume of cyberattacks from the agents and supporters of Country A. This isn't anything about the independence of the company from the government of its home country -- this is about a reaction to a perceived 'attack' on a company that is part of Country A's fabric.... because it drives business, employs citizens etc 

And tehse 'agents' could be anyone, from an affronted individual to an independent anti-US hacking group to a government-associated group to, let's face it, groups associated with other countries that will take the opportunity to launch an attack on US systems so that it looks like it is coming from Chinese agents... the point is, such a move (with an executive order) has no percievable gain but could have a negative impact. There are lots of groups that would look for any excuse/reason to attack the US while hoping they will not be identified as the culprit.

Huawei is an international powerhouse and is a Chinese company that is important to the Chinese economy.

Cisco is an international powerhouse and is a US company that is important to the US economy.

 

You say:

"Imagine China banning Google or Cisco or whatever US company (which they partially or totally do in some cases) and the US government or its various agents or so retaliate by cyber attacking Chinese government or companies??!! What would you induce about the independence of said companies from the US government??"

In this instance, I would totally expect China, including Chinese companies, to experience enhanced cybersecurity threats from US agents and supporters in this instance. And this wouldn't mean that Cisco is an agent of the US government -- I don't think that explicit connection between company and government needs to be there for resulting action to take place. You do. So we disagree. You think it's poor logic, I think this would be totally expected due to human behavior. 

And as I pointed out, I think that anti-Chinese groups, in this instance, would take the opportunity to attack China or Chinese interests under the guise of retaliation. It's my, perhaps cynical, belief that this is how the world works. And that is what is sad.

 
Phil Harvey
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Phil Harvey,
User Rank: Light Sabre
2/11/2019 | 12:28:19 AM
Re: But....
A stable, growing, highly competitive telecom market is best for Light Reading.  

Also, Huawei is an advertiser and so are all of the companies that benefit from it leaving the U.S. market. It's a bit silly to think we'd hitch our editorial wagon to any one single advertiser's agenda and, by doing so, alienate the majority of the firms that spend money on our site.

-ph
Page 1 / 2   >   >>
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